UNITED STATES OF AMERICA
Before the
COMMODITY FUTURES TRADING COMMISSION

In the Matter of CFTC Docket No. 93-16
JAMES M. MARREN OPINION AND ORDER

The Division of Enforcement ("Division") appeals from the
Administrative Law Judge's ("ALJ") order revoking
Marren's registration as a floor broker and preventing him from
reapplying for five years. The Division contends that the initial
decision suggests that the revocation sanction will terminate
automatically after five years and allow Marren to become registered at
that time. The Division asks us to make clear that under Sections
8a(2)(D) and (E) of the Commodity Exchange Act ("Act"), 7
U.S.C. §§ 12a(2)(D) and (E) (1994), revocation operates without
a specific time limit and until an individual successfully rebuts the
presumption of disqualification. The Division also argues that Section
9(b), 7 U.S.C. § 13(b) (1994), prohibits Marren from reregistering
or reapplying for registration during the term of the trading ban imposed
on him by the ALJ. Marren contends that he is entitled to reregistration
after five years.

As explained more fully below, the law is clear that a registration
revocation continues until specifically terminated by the Commission
after consideration of an application by the revoked registrant and that
registration will be conferred only upon a revoked registrant who
affirmatively shows that he or she poses no threat to the markets.

BACKGROUND

I.

On May 21, 1993, the Division brought a two-count complaint against
Marren.(1) Specifically, the first count
alleged that Marren had violated Section 4b(a)(iv) of the Act, 7 U.S.C.
§ 6b(a)(iv) (1994), by becoming a buyer with respect to a customer
sell order. The second count alleged that Marren was statutorily
disqualified from registration under Sections 8a(2)(D) and (E) of the
Act, 7 U.S.C. §§ 12a(D) and (E) (1994), because on March 9,
1993, Marren pled guilty to and was convicted of one felony count of
violating Section 4b(a)(iv) of the Act in the United States Court for the
Northern District of Illinois.(2)

The complaint ordered Marren to answer the complaint and the ALJ to hold
a hearing to determine whether Marren was subject to a statutory
disqualification and, if so, to suspend his registration and order him to
show cause why his registration should not be revoked. In September 1993,
the ALJ granted the Division's motion for partial summary disposition
as to Count I. The ALJ found that Marren's criminal conviction
collaterally estopped him from denying the facts upon which his
conviction was based. After an evidentiary hearing in November 1993 on
Count II of the complaint, the ALJ issued an initial decision in which he
ordered Marren to cease and desist from further trading violations,
imposed a five-year trading ban, and revoked Marren's registration as
a floor broker prohibiting him from reapplying for five years.

II.

This appeal is confined to a single sentence of the judge's decision:
"[Marren] may not reapply for registration for a period of five
years from the date this order becomes final." Div. Br. at 3. The
Division contends that these terms do not accurately reflect the
requirements of either Section 8a(2) or Section 9(b) of the Act.

The Division argues that, under Sections 8a(2)(D) and (E) of the Act, a
person disqualified for registration, upon reapplication, must
demonstrate to the Commission that he should be registered
notwithstanding his disqualification. The Division expresses concern that
the ALJ's statement could be interpreted to mean that Marren will be
presumptively fit for registration after five years.

The Division also points out that Marren was convicted of a felony
violation under Section 4b of the Act and therefore is subject to Section
9(b). The Division argues that Section 9(b) requires the Commission to
deny registration or reregistration for a term of at least five years. It
contends that Section 9(b) is "premised on Congress' conclusion
that persons convicted of felonies under Section 9 pose a particularly
virulent threat to the public interests protected by the Act, and
accordingly should be dealt with more severely than those with other
types of disqualifying convictions." Div. Br. at 6. It concludes
that the statute requires the Commission to deny registration for at
least five years and that any application submitted prior to that time
must be rejected summarily.

The Division requests that the Commission confirm that (1) Marren may not
apply for registration for five years after the date of the final
Commission order and (2) at the conclusion of the five-year period Marren
may apply for registration and his application will be judged based upon
his showing of rehabilitation.

Marren responds that the ALJ's order entitles him to reregistration
of his floor broker license upon completion of the five-year period of
revocation. Marren argues that Section 9(b) of the Act addresses
debarment from trading privileges, registration, and reregistration,
contending that it creates a rebuttable presumption of a five-year
registration suspension for a floor broker convicted of a felony
violation. Marren asserts that the ALJ revoked his registration for a
five-year period and denied him reregistration for the same period after
carefully reviewing the evidence. Marren submits that the ALJ's
determination is entitled to deference and that, had the ALJ believed
that a longer period of time was necessary, the ALJ would have imposed
it. Marren maintains that no further proceedings are necessary and that,
if additional grounds arise bearing on his unfitness, the Commission can
initiate a new proceeding.

DISCUSSION

Registration revocation under Section 8a of the Act continues until
specifically terminated by the Commission in response to an application
by the revoked registrant. Section 8a creates the statutory bases for
disqualification from registration. The statute does not contemplate a
time period after which the registration revocation shall expire and the
registrant shall be automatically reinstated. In each case the person
applying for registration must demonstrate that he or she no longer poses
a threat to the integrity of the markets.

By the same token, the Act does not establish any time limit on an
individual's ability to reapply for registration after being revoked.
We have held that ordinarily revoked registrants may reapply at any time.
In re Hirschberg, [1995-1996 Transfer Binder] Comm. Fut. L. Rep.
(CCH) ¶ 26,573 at 43,523 (CFTC Dec. 27, 1995) citing at n.14,
Silverman v. CFTC, 562 F.2d 432, 439 (7th Cir. 1977);
Sundheimer v. CFTC, 688 F.2d 150, 153 (2d Cir. 1982); In re
Loewinger, [1982-1984 Transfer Binder] Comm. Fut. L. Rep. (CCH)
¶ 21,804 at 27,343 (CFTC Nov. 27, 1981); In re Cayman Associates,
Ltd., [1982-1984 Transfer Binder] Comm. Fut. L. Rep. (CCH) ¶
21,999 at 28,392 n.10 (CFTC Feb. 10, 1984). Consequently, the ALJ erred
by forbidding Marren to submit an application for registration for five
years and the time limitation imposed by the ALJ is vacated. However, a
future application for registration by Marren will not be granted unless
he overcomes the presumption of unfitness for registration raised by his
statutory disqualification. See, e.g., In re Ryan,
CFTC Docket Nos. 91-10 and SD 93-17, 1997 LEXIS 101, at *43 n.34 (CFTC
Apr. 25, 1997).

CONCLUSION

The trading prohibition and cease and desist order previously imposed by
the ALJ and the registration revocation shall become effective 30 days
from the date of this order.(3)

1. The complaint had its genesis in a sting
operation the Federal Bureau of Investigation ("FBI") conducted
during 1987-1988 in the Japanese Yen futures pit of the Chicago
Mercantile Exchange ("CME"). Marren was a member of the CME. He
had been registered with the Commission as a floor broker since 1982.

2. Marren was indicted in August, 1989. The
jury failed to return a verdict. In March 1993, Marren entered into a
plea agreement in which he pled guilty to one felony violation of Section
4b(a)(iv) of the Act. In May 1993, a judgment order of conviction was
entered against Marren based on his guilty plea. The court sentenced
Marren to two months incarceration, four months work release, and six
months probation. Marren was required to pay the cost of imprisonment at
the rate of $1,492 per month, the cost of supervision in the work release
program at the rate of $991 per month, and the cost of supervision during
probation at the rate of $1,318 per year. The court imposed a $5,000 fine
and a special assessment of $50 and required him to pay $250 in
restitution.

Marren's floor broker privileges were suspended for one month
pursuant to his settlement with the CME of a disciplinary proceeding
stemming from his felony conviction. The term of the suspension was
reduced by a three-week period when Marren voluntarily refrained from
exercising his floor privileges.

3. A motion to stay the effect of this
decision pending reconsideration by the Commission or review by a court
must be filed within 15 days of the date this order is served.
Compare Commission Rule 10.106, 17 C.F.R. § 10.106, (1996).